Indonesia to ease palm oil domestic sales rules starting May

Credit: REUTERS/WILLY KURNIAWAN

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JAKARTA, April 27 (Reuters) - Indonesia will lower its mandatory domestic sales threshold for palm oil producers to 300,000 tonnes a month starting in May, the Trade Ministry said on Thursday, allowing more shipments of the widely-used oil to leave the country.

The world's top palm oil producer tightened exports earlier this year in anticipation of higher domestic demand for cooking oil ahead of the holy Islamic month of Ramadan, which started in late March this year.

Global markets were left shocked last year when Indonesia banned all exports of palm oil for three weeks to control soaring cooking oil prices at home. Since then the government has imposed the so-called Domestic Market Obligation (DMO) to control exports, a policy it tweaks regularly in accordance with market conditions.

From May, the government will tighten the ratio of palm oil exports to four times the volume producers have sold domestically, from six times the volume currently, but ease the ratio for some cooking oil products.

Overall, the exports allowance will now be bigger, said senior Trade Ministry official, Isy Karim.

Producers who distribute simple packaging cooking oil, instead of in bulk, could export up to nine times their domestic sales volume.

The government will also allow companies to resume the use of around 3 million tonnes worth of palm oil export permits that were suspended earlier this year. These permits will be allowed to be used in stages within the next nine months, senior trade official Budi Santoso added.

Meanwhile, the government will continue to improve its domestic palm oil distribution policies to ensure stable prices throughout the country, ministry officials said.

(Reporting by Bernadette Christina Munthe, Fransiska Nangoy; Editing by Kanupriya Kapoor)

((Fransiska.Nangoy@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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